Thomas Cook shares crash on profits warning sparked by Mideast unrest

AFP, Tuesday 12 Jul 2011

British travel group's profits take a harder than expected hit asregional turmoil slashes holiday demand for key destinations like Egypt, Tunisia and Morocco

Shares in British travel group Thomas Cook plunged 27 per cent on Tuesday after it issued a gloomy profits warning blamed on weak consumer sentiment and ongoing unrest in the Middle East and North Africa.

Thomas Cook's share price collapsed by 27.14 per cent to stand at 89.40 pence in London morning deals, as the group added that it would begin a wide-ranging strategic review of its struggling British division.

The firm said in a trading update that there would be an earnings shortfall in the third quarter, or three months to the end of June, which would leave its full-year profits behind previous company expectations.

Thomas Cook said it expects full-year underlying 2011 operating profits of £320 million (363 million euros, US$506 million). That compared with 2010 profit of £362.2 million.

"The main reasons for this shortfall are the higher than previously forecast impact of the ongoing political unrest in the Middle East and North Africa (MENA), particularly on our French operations, and the performance of our UK business in the face of difficult trading conditions," it said in a statement.

"The MENA impact will be substantially higher than previously estimated, with our French business in particular seeing further reduced demand and lower margins during peak season for its key destinations of Egypt, Tunisia and Morocco.

"The profitability of our UK business continues to be impacted by the difficult trading conditions, mainly as a result of the continued squeeze on UK consumers' disposable income," Thomas Cook added.

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